Ethics

I chose not to post my actual summary here due to the sensitive nature of some of its content. I don't want the occasional viewer to try to put faces with names in this case. I actually feel posting that content in an open forum would actually be unethical in itself.

This exercise really got me thinking, however, about how sometimes carelessness plays a role in ethics. Sometimes the intention isn't necessarily unethical. But the end result, due to carelessness, is. The occasional slip of the tongue. A little twist in one's mind as to what is right or wrong or fair.

As administrators, we really must think before we act. Our decisions affect so many.

Hey brother, can you spare me a 5% raise?

As of 2010-11, our total payroll costs constituted 82.5% of our general revenue. This figure is actually slightly in excess of $17 million ($22.5 million total expenditures district-wide).

It obviously makes up the vast majority of our budget. Our salaries are competitive within that area, but there are larger, more diverse schools around that pay substantially more.

A 5% pay bump would push total payroll costs to approximately $17,935,861. This would constitute 86.66% of our total expenditures. Our revenue stood at $22,493,037 this same year.

In short, the 5% raise would be sustainable in the short term. Additionally, our fund balance is in excess of $6 million. We actually got hit in FIRST (as mentioned above) for excessive funds. So short of a financial breakdown altogether, we could sustain the increase for a number of years.

Positive attributes of the raise would include increased morale, an increase in the competitiveness of our district in hiring and retaining talented teachers, and an infusion of funds back into our community (as the vast majority of our staff both lives and works in our district).

The only negative I can initially see is the possible eating away of a healthy fund balance should property values significantly decrease (or state funding concerns of course). The other is that the increase might not be sustainable in the long haul if the above conditions come to fruition. There are laws in place that don’t allow for salary reductions across the board. Therefore, the possibility of a RIF or (bare minimum) not replacing departing or probationary staff could be a reality.

External Audit Interview- CFO Tim Brittain

Interview

I interviewed Tim Brittain, our CFO at Huffman ISD. He has been very helpful and is extremely knowledgeable about the process. The following is both a summary and reflection of the audit process:

• How is the external auditor selected?

The auditor is selected through an interview process. Initially there is an RFQ (request for qualifications). The superintendent, in cooperation with the business manager, then selects the auditor. Mr. Brittain was quick to point out that you can’t do a competitive bid. It must be through the interview process and the district should choose one that best suits the needs of their particular district. Ours rotate through two year contracts and must have board approval.

• How does the auditor conduct the audit?

Our district initially sends any requested information that generally includes both general ledger and financial records. The auditor reviews the information and inputs it into their accounting system for analysis. At that point the auditor comes on site (usually for about a week) and reviews records. They randomly select files such as personnel folders, vendor records, etc. for review. At the conclusion of the onsite visit they return to their offices and develop a detailed summary audit report. It is due to TEA 120 days after the end of the fiscal (normally around January 28).

• What does the audit conclude about district financial procedures and actions?

If all affairs are in order, they will issue a summary statement basically stating that they didn’t find any material weaknesses. If there are paperwork issues that can be resolved, there is a possibility to correct. Unfortunately, if there is a material weakness, it is basically irresolvable at that particular point and will end up going to TEA.

• How are the results communicated?

Initially the auditors will meet with the audit committee which consists of the superintendent and three board members. Next they will have an exit interview with both the business manager and superintendent. It is at that point that they present the summary to the board for approval and signing off on at the January board meeting. Then it starts all over. J

Reflection

This was an exceptional assignment for me as this was one area that I was completely unfamiliar with. I have never played any role whatsoever in a district level audit so all the information was new to me. From time to time we hear issues arise in area districts concerning mismanagement of funds. I am fortunate to have never worked in any of these districts. For us, it has always been about the kids.

Finance Week 3 Part 4

Huffman ISD is the only 3A school in Harris County. However, we are similar to schools in our particular area in the sense that the vast majority of our tax revenue is residential. In fact, our residential tax value constitutes 74% of our base. Simply put, the majority of the local tax burden that runs our district rides on the shoulders of the homeowner (the majority of which are our parents).  It is the secondary funding source for our M & O. Our revenue sources are $8,490,000 locally, $12,778,000 from the state. Our WADA is $3789 under Senate Bill 1. Our revenue per WADA is $5150. So understandably, the majority of salaries and operating costs (which fall under M & O) are funded primarily by state revenues, and residential tax sources.

Our district enrollment is approximately 3200. Interestingly, we are similar sized to the schools we have been sampling this week so all this hits close to home for me. Our economically disadvantaged is 31%, the majority of which is at the elementary level. In fact, our elementary receives Title funds. We have a healthy fund balance in excess of $6,000,000. In fact, this Tuesday, following a board meeting, it was announced that each full time employee would receive a $600 Christmas bonus (of course they didn’t call it that). This is testament to the fact that our district is in great shape financially.

We are not a Chapter school. However, we have an overabundance as compared to our WADA. Percent spent on instruction is 57.4% and is allocated and spent properly. Our district is in great shape due to good planning, and sound accounting practices.

Stakeholder Input in Budget Development

Below is a listing of different stakeholder inputs in the budget process. It is obviously important that, when there are multiple parties requesting funding, much consideration is made as to where money will be spent in order to achieve the greatest results and meet the greatest needs. With input from the DEIC, and strict adherence to fashioning the budget so that it meets its goals, budgets can be an incredibly powerful tool in the educational process.

What types of input could you receive for budget development from each of the following individuals or groups:

Ø  Central Office Administrators and Staff- Examples would be curriculum needs from curriculum coordinators, and special service needs from special service directors. Have specific needs for their individual programs and departments. 

Ø  Principals- any and all needs that are specific to individual campuses

Ø  Site Based Decision Making Committees- on campus, bring campus needs to principal for consideration. At district level, set goals that drive budget.

Ø  District Improvement Committee- see above

Ø  Teacher Organizations- don't play a major role in our district other than providing opportunities for insurance. In other districts provide an opportuntity for teacher representation associated with needs.

Ø  Key Stakeholders- all have individuals needs and wants. Play a key role in bringing budget considerations to individual principals and program directors who in turn carry to district-level budget meetings.

Ø  Board of Trustees- The local education association controls programming within the district. Their goals, coupled with those of the SBDM, drive the budget.

Superintendent Involvement in Budget Development

Summary:

Our superintendent, in coordination with our CFO, campus principals, and program directors, guides the development of each year’s budget.

Some of the considerations are as follows:

1. analysis of previous budgets
2. review of needed adjustments made throughout the course of the year
3. short range needs
4. capital outlay expenditures

Our budget is driven by the goals identified by our DEIC (our site based decision making committee). Information is derived from campus principals as to the needs of each campus. Additionally, directors from support services are involved for needs serving multiple campuses. Common examples of this would be a transportation director with a need for multiple new buses for the district, or a maintenance director needing new roofs for structures.

The superintendent is ultimately responsible for being able to explain the budget to the board of trustees. To say they must be able to “defend” it sounds somewhat divisive. It is not the intention (in most cases) but is accurate in description none the less. They must be knowledgeable enough to be able to answer any questions and provide explanation when the budget is put before the board for approval. Hopefully, there is conversation prior to approval if there are any questionable components of it. Nobody likes surprises and most especially at board meetings. J

True involvement of stakeholders is critical in developing a working budget. Although our superintendent has an excellent working knowledge of the needs of our district on a macro level, no one has more intricate knowledge of the needs of individual campuses than our principals. Working together with counselors, team leaders, assistant principals, and coordinators, they work to bring a comprehensive campus budget for consideration in the district budget. It is in this way that budgets are most successful in our district. I’m not sure everyone gets everything they want, but they definitely get what they need.

Reflection:

None of this is much of a surprise to me as I have been around the budget process for more than a dozen years in various capacities. Although organized, it is a fairly detailed process. Additionally, movement of monies beyond their original functions requires board approval. Therefore, it is extremely important to get it right the first time in order to avoid snags. I believe our district does it right. The budget isn’t micromanaged, and the right stakeholders are allowed input.

TEA budget guideline reflection

One of the first thing that stands out in my mind after reading through the TEA guideline is the fact that the budgeting process is comprised of three separate phases: 1) planning, 2) preparation, and 3) evaluation. The critical components of these three phases are listed respectively:

1. -defining both district and campus goals and the development of programming that helps attain those goals.
2. The allocation of budgetary resources to these programs is the actual preparation phase.
3. In the evaluation phase we typically determine whether the resources used were successful in creating the effect we sought.

I was unfamiliar with the different types of budgets in use throughout Texas school districts. I guess I assumed because it was so heavily tied into state regulations that the state of Texas has a very specific “fill in the blank” format to use. I had no idea there were that many budgeting approaches in use. Our district predominantly uses the site-based budgeting concept. A great deal of control is given to campus administrators as far as budget development and resource allocation is concerned.

In reference to my aforementioned assumption, I also learned specifically what state guidelines are outlined concerning the school budget. The following concepts are outlined in TEC concerning school budgets:

1. The superintendent is the budget officer for the district.
2. There are specific dates that the budget must be both prepared and adopted by.
3. The budget must be adopted in a public board meeting.
4. A summary of the budget must be posted on the district website (or central office if no website is available).
5. No funds may be expended other than provided for in the budget. Amendments are possible by the board.
6. The budget must be prepared under state guidelines and generally accepted accounting principles.
7. The budget generally must be adopted prior to adopting the tax rate.
8. If a tax rate is adopted prior to budget adoption, there must be a published open meeting to discuss the rate.
9. The adopted budget must be posted on the school website where it must remain linked until the third anniversary of its adoption date.

There are additional requirements but the above form the basis for state regulation of the budget process.

I could pretty much utilize ANY information that would guide me in budget development as I have never had control over anything other than function 36. Some of the things I learned were that although there definitely is state regulation and guideline, there still remains a large amount of local control over the process.

Secondly, exposure to the different budgeting approaches will better enable me to ultimately come up with an approach I feel comfortable with. With that being said, I love empowering people. I believe the site-based approach is the style for me.